BANGKOK - In the end, Thaksin Shinawatra's
fall from power was just as dramatic as his
spectacular political rise in 2001. The embattled
caretaker Thai prime minister on Tuesday announced
on national television his decision to step down,
saying that he would not accept the premiership if
and when the House of Representatives convenes its
first session after his Thai Rak Thai party was
swept back into power at April 2 polls.

"I
seriously need to apologize to the 16 million
people who voted for me to be prime minister,"
said a contrite Thaksin, visibly

shaken
and teary-eyed. "It's time for all of us to
express in unity our loyalty for the King," he
added later. Thaksin expressed his wish that his
resignation would defuse the people-power protests
that have rocked his government in recent weeks.

Monarch in the middleThaksin's announcement came
directly after meeting with His Majesty King
Bhumibol Adulyadej at his palace in the coastal
resort town of Hua Hin. The anti-government
People's Alliance for Democracy (PAD) protest
movement and the political opposition
had both repeatedly called upon the
highly revered monarch to remove Thaksin from
power and appoint an interim government.

The palace maintained its silence to those
calls, and it was not disclosed what was exchanged
between Bhumibol and Thaksin during their
closed-door meeting on Tuesday. However, there are
strong indications of some sort of royal
intervention aimed at preempting a violent clash
between pro- and anti-government groups. Thaksin
cited the need for national unity during this
June's 60th-anniversary celebrations of Bhumibol's
accession to the throne as an important motivating
factor for his resignation.

Meanwhile, PAD
leader Sondhi Limthongkul said supporters would
hold their last protest this Friday in tribute to
the King. In retrospect, the people power-protests
that were instrumental in dislodging Thaksin from
power had significant royal antecedents. Media
firebrand Sondhi first galvanized Bangkok's middle
class to the streets last October through
explosive allegations that Thaksin was usurping
functions traditionally reserved for royalty.

Bhumibol first appeared to defuse the
antagonism during his annual birthday address in
December when he called upon Thaksin to drop a
string of defamation suits against Sondhi
requesting US$50 million in damages. But the
anti-government protests were rekindled by the
more broad-based PAD in January after the
Shinawatra family sold off shares in the Shin Corp
communications business that Thaksin founded to
Singapore's Temasek Holdings in a controversial
$1.9 billion tax-free transaction.

A large
cross-section of Bangkok's upper and middle
classes, donning "We love the King" yellow
T-shirts, had rallied behind the cause of
defending the monarch. More recently,
pro-government protesters had besieged some
critical media outlets that had published articles
that they believed inappropriately referred to the
revered monarch.

Senior Privy Council
members who advise the King had repeatedly called
upon the government and protest leaders to
compromise. Both sides still refused to back down,
and a string of mysterious bombs targeting the
political opposition and key protest leaders'
headquarters signaled a dangerous escalation.

There were also worrying indications that
Thaksin was preparing to crack down on protesters
soon after Sunday's polls. According to PAD leader
Sondhi, certain elements in the army had also
encouraged him to raise the tempo of his peaceful
protests, a move that would open the way for a
military intervention that could have been
manipulated to knock Thaksin from power. Sondhi,
however, said he refused to put his followers at
risk.

As tensions mounted, the noose
tightened on both sides of the political divide.
Thaksin had on several occasions irritated Privy
Council members by pushing to promote his Class 10
(military training) school colleagues above more
senior officers during annual military reshuffles,
most recently through his attempts to elevate his
allies to senior posts in charge of Bangkok's
security.

Sondhi, meanwhile, after rousing
crowds with his battle call to "fight for the
King", had himself come under threat for making
public comments that many construed as lese
majeste - charges that can carry jail terms. Army
Commander Sonthi Boonyaratglin, who earlier had
said the military would remain in the barracks and
not take sides in the political conflict, over the
weekend stated his opinion that the speech in
question violated lese majeste laws.

Behind the curtainThaksin's
resignation comes with some important strings
attached aimed at maintaining his influence over
politics and guarding against any opposition-led
probes into his government's or his family's
finances. One member of his party suggested that
he could play an active elder-statesman role,
similar to Lee Kwan Yew's overarching authority in
Singapore's politics.

If so, he will lack
the same moral authority. Although his Thai Rak
Thai party scored a sizable majority at Sunday's
elections, the 16 million votes were a
considerable slip from the 19 million he won in
February 2005, and only slightly above the party's
15 million registered members. The main opposition
parties boycotted the election, but Bangkok voters
tallied "no votes" in record numbers against
Thaksin's candidates, indicating that the recent
allegations of corruption and abuse of power made
by PAD protesters in recent weeks had a big impact
on the politically powerful urban middle class.

(A recent Phatra Securities report
indicated that while Bangkok accounts for only 10%
of the population of Thailand, in economic terms
it earns about 50% of national gross domestic
product.)

Even before the polls, Thaksin's
political advisers had suggested that he take a
break from politics and allow an interim prime
minister to oversee constitutional reforms and
makes amends with Bangkok's middle class. It has
been suggested that new polls would be held after
reforms are completed next year, and the main
opposition Democrat Party has already indicated it
would participate in new democratic elections.

Thaksin has said he will retain the Thai
Rak Thai party leadership as well as his status as
a member of parliament, and has already vowed to
continue his economic programs, including various
populist moves aimed at the rural poor and the $38
billion worth of infrastructure projects that have
attracted foreign investors.

Beneath a
veneer of unity, Thaksin's party is famously
divided among competing factions, the largest of
which was established and led by his own sister to
counterbalance the old-guard patronage politicians
inside the party. Throughout the recent political
turmoil, the party has remained remarkably
cohesive - though the large clan led by
Agriculture Minister Sudarat Keyuraphan held
meetings in February to discuss leaving the party,
according to a well-placed diplomat.

It is
questionable whether the party's cohesion will
endure once Thaksin steps aside. Early indications
are that he will tap either Commerce Minister
Somkid Jatusripitak, an obscure former academic
and marketing expert who lacks popular resonance
in the rural countryside, or Bhokin Polakul, a
constitutional lawyer and former House Speaker.
Both politicians lack popular support bases, and,
as staunch Thaksin loyalists, would conceivably
allow Thaksin to continue to steer policy.

If a new government is formed and is able
to ramp up infrastructure spending quickly, a
somewhat unlikely prospect considering the
corruption allegations that have hounded previous
projects, then the patronage politicians in his
camp will likely stay put. But personality
politics will also likely become more pronounced
as Thaksin plays favorites, political analysts
say.

By picking Somkid over powerful
politicians with established rural support bases,
the party could soon show fissures. The move to
elevate Somkid will likely alienate party
power-broker Suwat Liptapanlop, who after
dissolving his Chart Pattana party to join Thai
Rak Thai had earlier been groomed as Thaksin's
heir apparent. Former party power broker Sanoh
Thientong and his clique earlier abandoned the
party and joined the anti-government protests.

Moreover, if it becomes apparent that
Thaksin is still pulling the strings behind
government, protest leaders have already vowed to
return to the streets. "This could be a trap,"
said PAD leader Sondhi soon after Thaksin's
announcement. "We will reserve the right to judge
if Thaksin is still pulling the strings from
behind the scenes." He said the PAD will wait
until April 30 before deciding the next move.

And, as such, there are still big clouds
over Thailand's political future.